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SB367: HECO wants to socialize cable cost, privatize any profit

by Rep Cynthia Thielen

If the majority of the lawmakers and Hawaiian Electric Co. get their way under Senate Bill 367 — the bill designed to finance an interisland cable — the Oahu ratepayer will be solely responsible for the cost of the project, predicted to cost somewhere between $500 million to $1 billion.

An editorial in Sunday’s Star-Advertiser indicated otherwise (“State utility grid desirable but help small-scale users, too,” Star-Advertiser, Our View, March 20).

SB 367 contains several astonishing entitlements. It allows the utility to recover the full cost of the interisland cable and on-island infrastructure, no matter what the outcome. Once approved by the Public Utilities Commission, these costs would be applied to the ratepayer in the form of an automatic rate adjustment, seen as an added surcharge on everyone’s bill until the project is paid in full. The cost includes every conceivable expense, from predevelopment through commercial operations, and even includes a guaranteed rate of return for the utility and its lucky shareholders.

This boon applies to the utility no matter what degree of success the project has. Even if the cable is unsuccessful or plagued by problems, the utility will still recoup all its expenses, from planning to operations with a profit to boot.

Proponents of the bill argue that SB 367 is just establishing a regulatory structure. True enough, and this regulatory structure will change the way the utility does business, forever.

Proponents also argue that the risk is very small that the project will not succeed. But if the risk is so small, why are HECO and state Department of Business, Economic Development and Tourism so determined to pass all the costs to all of us?

Proponents argue that the only way to make the cable happen is to take all of the risk out of the project. But is this truly the only way? And if the ratepayer must foot the bill, why aren’t they entitled to a part of the profits as well?

Almost everyone agrees that Hawaii must wean itself from imported oil before it is too late, but the question is how.

Perhaps the only possible way for Hawaii to move forward is for the ratepayer to foot the entire bill for a massive wind project, and that it is too much to ask the utility to take any of the risk.

But if this is true, it seems only prudent, only fair, that before the ratepayer agrees to pay for the cable, we would know the cost.

The likely response? The utility can’t tell us the cost until we agree to pay for it.


Rep. Thielen Addresses HECO's underwater cable project

excerpt from Capitol TV March 24, 2011


Report Title: Energy; Interisland High Voltage Electric Transmission Cable System; Public Utilities Commission; Tax Exemptions

Description: Establishes a regulatory structure for the installation and implementation of an interisland high voltage electric transmission cable system and for the construction of on-island transmission infrastructure. Allows for the utility company to collect surcharges from its ratepayers to recover the costs of the cable installation on behalf of the cable company. Exempts the surcharges from being counted as gross income, adjusted gross income, or taxable income for tax purposes. Provides for the eventual acquisition of the cable system by the utility company from the cable company. Allows the utility company to recover the costs of acquiring the cable system and developing the on island infrastructure through an automatic rate adjustment clause and then through its rates. Allows the utility to recover the reasonable costs, as determined by the public utilities commission, of predevelopment and development in the event that the system is not completed. Effective July 1, 2011. (SB367 HD1)





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